Depreciation of Pak rupee increases cost of imported raw material

Karachi: The Union of Small and Medium Enterprises UNISAME has informed the prime minister Nawaz Sharif about the difficulties faced by the SMEs for import of raw material due to depreciation of rupee and harsh measures in budget and urged him to direct the finance minister to take measures and facilitate the sector for survival.

President UNISAME Zulfikar Thaver invited the attention of the PM to the burden placed on the SMEs in the budget and urged him to reconsider the aspects which are bound to make goods and services costlier. He questioned the wisdom behind certain taxes and wondered at the calibre of the financial managers.

The union committee pointed out that the increase in sales tax to 17%, the withholding tax of 0.5% on moveable assets and increase in income tax itself will give rise to further inflation. The imposition of 42.5% tax on mobile phone is beyond understanding and far too much as cellular phones is used by all classes of people and nowhere in the world the tax on communication is so high.

It seems the FM has failed to comprehend that there is a parallel economy of undisclosed money which is flourishing in the country and buying dollars every single day and no steps have been taken to bring them in the tax net rather the bonafide SME traders and manufacturers already on the tax net have been over burdened with further import duties and the depreciation of the rupee is making the import of raw materials more and more expensive.

The rate of exchange has made imports very costly and since the duties are on invoice value the government should either reduce import duties or fix the exchange rate for imports to make imports feasible or else imported raw materials and essential goods will become unaffordable.

The union stated that the SMEs expected prompt redress to their grievances but regretted that despite having a good team of experts the government has not applied its mind to the requirements of the sector.

The union expects the government to exempt all import duties and sales tax on generators, alternate energy devices, farm equipments and machinery as a whole and are surprised that a business friendly government did not take positive steps. The union has now given the PM a list of steps for prompt action for jump start which includes amongst other things wide scale leasing facilities for the sector.

Thaver said that the union is of the firm opinion that the government should introduce the concept of pay as you earn for purchase of commercial property, machinery, farm equipments, income generating vehicles and technology and guaranteed the government that leasing finance would give thrust to the economy.

The union team urged the PM to remember his promise to the sector to make life comfortable for them and invited his attention that the sector cannot function due to poor law and order, insufficient energy, high taxes, hyper inflation, fast depreciation of rupee, non availability of raw material and lack of access to finance.

The union asked the PM to spare time and meet union experts to chalk out strategy for the sector for rapid growth of the economy on fast track basis.